Railroad stocks rise as tentative deal averts planned labor strike by thousands of rail workers
AP Photo/Gene J. Puskar
- Railroad stocks rose Thursday after unions and railway companies reached a tentative labor deal, averting a strike.
- Tens of thousands of unionized workers had been set to go on strike if no agreement was reached by Friday.
- The Association of American Railroads estimated a labor strike could cost the US economy more than $2 billion a day.
Shares of railroad companies climbed Thursday after all-night labor talks resulted in averting a strike that threatened to disrupt the delivery of fuel and other goods in a supply chain that's still recovering from the COVID-19 shock.
The White House announced a tentative deal between railway companies and unions representing tens of thousands of workers but it did not provide specific details. President Joe Biden said workers will receive improvements in pay and working conditions.
"The agreement is also a victory for railway companies who will be able to retain and recruit more workers for an industry that will continue to be part of the backbone of the American economy for decades to come," he said in the statement.
CSX shares rose 2.1% to $31.90 in premarket trade, poised to pare their year-to-date loss of about 17%. Norfolk Southern picked up 3% and Union Pacific gained 2.7%.
Railway workers had been expected to go on strike Friday if no deal had been reached. Labor Secretary Martin Walsh brokered the talks that stalled between unions and railway companies.
The Association of American Railroads said in a statement the new contracts will provide rail employees a 24% wage increase during a five-year period from 2020 through 2024, including an immediate payout on average of $11,000 upon deal ratification. The agreements collectively represent about 60,000 employees, it said. Union members will need to approve the contracts but they will not strike while their votes are being counted.
The AAR earlier this month released a report saying a strike could cost more than $2 billion a day to the US economy and idle more than 7,000 trains each day.
A strike would have disrupted transportation within the commodities market. About 70% of US-produced ethanol is shipped by rail, according to S&P Global Commodity Insights, citing the Renewable Fuels Association. Utility coal deliveries were also at risk ahead of pre-winter restocking and at a time of higher demand in the wake of Russia's war against Ukraine.
from Business Insider https://ift.tt/1C8IjuX
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